euronews CEO: VOD Higher Priority than HD

euronews, an international news channel covering the world from a European perspective, is one of the mainglobal news broadcasting brands. The channel was launched in 1993 and now is broadcast in a number of languages: English, French, German, Spanish, Italian, Portuguese, Russian and Arabic. The channel, distributed on numerous DTH platforms around the globe, also is a major buyer of satellite capacity.

One of the next challenges facing euronews is when to add HD broadcast to its offerings. For news channels, it may seem less compelling to make the move to HD, plus it is also more complex, given the acquisition of source material in the field.

Via Satellite spoke to euronews CEO Philippe Cayla at the Arabsat Broadcaster’s Forum in Beirut, about the channel’s HD strategy and how euronews intends to use satellite technology to increase the reach of its content.

VIA SATELLITE: What are euronews’ plans to begin HD broadcasting?

Cayla: We want to start HD as soon as possible. There is a market in the United States. It was also mentioned at the Arabsat Broadcaster’s Forum. There are already a number of HD channels in the United States and the United Kingdom, so quite frankly, we need to be in HD. The issue we have is that we need our sources to also be in HD, however, we will start producing in HD ourselves for our magazine type programs. We have already made changes in the production chain. Now we plan to start HD next year. 

VIA SATELLITE: How will you acquire HD source material?

Cayla: We are talking to all of our shareholders about getting the source material in HD. I think this will take some time. I think we will start with some HD and some SD features, and we are starting the transformation process this year. We hope that five years from now everything will be in HD. 

VIA SATELLITE: How will the move to HD affect your capacity requirements?

Cayla: We have to decide which regions of the world we are going to do HD. We are using capacity on 38 different satellites. Some satellites are DTH satellites, and the capacity deal is locked in with the pay-TV platform. But in many cases we are paying for the capacity, so in this case we will be looking at what deals we can do for capacity. We are not going to be on every satellite at once. Certainly, the United States will be a priority for us. Europe will come second and the Middle East will be third. 

VIA SATELLITE: There is understandable rationale behind a sports or movie channel going HD. Is it really compelling for news broadcaster such as euronews?

Cayla: I think it is becoming more important. Obviously, for a movie channel, it is perhaps more important. When you start watching movies in HD, you can’t then go back. You are seeing more and more 3-D movies become available such as “Avatar.” Once you see “Avatar,” you will want 3-D every time. For movies, it is a must to be in HD. For major sports events such as the World Cup, a lot of content will be produced in HD, but everything has a cost. It is not just the costs of satellite capacity but also the production costs involved. You also have the option of going IP, and this is something we have been discussing. IP is potentially a good alternative to satellite when looking at HD for broadcast transmission. 

VIA SATELLITE: You are looking at IP transmission as an alternative to satellite?

Cayla: In certain circumstances this could work. For example, if you are covering the World Cup in South Africa in June and you have the issues of transporting that content all over the world, there are options in terms of satellite and IP. 

VIA SATELLITE: Is HD a priority for euronews?

Cayla: I would say it is not an immediate priority [due to issues with getting HD content from our sources]. It is three to five years out. 

VIA SATELLITE: If HD is not the priority for the company, what would you say is?

Cayla: We want to start developing Web sites in different languages. This is the first priority. The second priority is to develop on-demand and then also HD offerings, but we would say video-on-demand (VOD) free of charge. It has become some kind of catch-up news site. We would like to develop this VOD offer. We would like to finalize deals with cable as well as IPTV operators. We are starting a VOD service in France with cable operator Numericable, and we are now looking to take this to other territories in Europe. We would like to deepen our relationship with cable and IPTV operators in terms of on-demand offerings. There may also be possibilities to do this with satellite broadcasters out there, but it is more difficult to have a VOD offer on satellite, so VOD and HD are two of the main technical challenges that we face in the next three to five years. 

VIA SATELLITE: A lot of satellite pay-TV operators have IP-enabled set-top boxes. Will you be able to do more on-demand things with them 

Cayla: You can have the combination of satellite and IP, but VOD via satellite costs a fortune. Our focus right now is more on doing deals with cable and IPTV operators in terms of VOD. It is difficult to provide these type of services via satellite at a reasonable cost. 

VIA SATELLITE: In terms of geography, has there been a change in where euronews derives its revenues?

Cayla: A lot of what euronews does is about the languages in which it offers it broadcasts. Recently, we have started broadcasting news in Turkish. Later this year we will start to doing broadcasts in Farsi. This has opened markets to around 250 million people, so this has been a significant development for us. We also have plans to offer broadcasts in additional languages, but we are also considering adding more European languages and non-European languages.

In terms of penetration, we reach 230 million households in the EMEA region. In Europe, this translates to 80 percent of people. In the Middle East, we are on Arabsat and Nilesat, which means we have a 70 percent penetration of this region. We are also present in Africa. We reach more than 20 million households in Africa, which means more than 100 million people. I think we are doing very well in terms of overall penetration. In North and South America, we have a very good start. In South America, we recently did a deal in Argentina with Cablevision. We are now in 300,000 households in Buenos Aires, so this is a significant breakthrough for us. We are expecting other significant breakthroughs there, particularly in Brazil, for example. In North America, we have a reach of close to 50 million households, which includes terrestrial, cable and satellite. In Asia, we are also seeing good growth in territories such as South Korea. We are expecting to be present in Taiwan very soon. We are also present in Indonesia. We are expecting to gain a license in India. 

VIA SATELLITE: Has the economic slowdown impacted your business in any way

Cayla: No. On the commercial revenue side, we had an increase of 15 percent in revenues in 2009 compared to 2008. We had an increase of revenues of more than 10 percent on the broadcasting side and over 25 percent on the Internet side. Thanks to our international network, 50 percent of our clients are now non-European. In Europe, there may have been a significant slump, but it has not impacted us as much as it could have. Around 50 percent of our broadcast revenues come from the Middle East, Asia, Africa and other regions. 

VIA SATELLITE: What is the breakdown of your revenues in terms of advertising versus subscription?

Cayla: Around 25 percent of our revenues come from service contracts within the European Commission. I would say 15 percent of revenues comes from licenses from our shareholders. The rest comes from advertising and sponsorship, so we have a great deal of revenues coming to us now commercially. 

VIA SATELLITE: What is your vision in addressing the mobile TV market?

Cayla: We are on more than 30 mobile networks now, and most of these are 3G networks, however, it is still expensive to have a channel on a mobile network. We are still awaiting for the broadcasting mode to develop over mobile. From a point-to-multipoint perspective, it works, but it has not worked so much up to now. We want the technology to develop more here. There are still many issues and different technology used in different countries. There are different standards in France and Germany, for example. There is no standard in Europe.

We are also expecting satellite technology to play a role here, particularly with what Solaris Mobile is doing. They have had some problems with their satellite, but we think this is very good for us, as it offers coverage throughout Europe and allows us to broadcast everywhere in different languages.

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